Capitol dome (Photo: Heather Trautvetter)
Bills were introduced in both chambers of the U.S. Capitol to make full immediate expensing permanent. (Photo: Heather Trautvetter)

Congress Considers Bonus Depreciation

House and Senate companion bills would make this tax benefit permanent for qualified equipment—including business jets.

The National Business Aviation Association is backing companion legislation introduced in the House and Senate this month that would make permanent 100 percent bonus depreciation, or immediate expensing, for qualified capital equipment, including new and used business aircraft. Immediate expensing was modified and extended as part of the Tax Cuts and Jobs Act but is set to begin phasing out at the end of 2022 and completely phase out by 2027.

Qualifying Your Jet for Bonus Depreciation

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Qualifying Your Jet for Bonus Depreciation

Though the term is misleading, this tax benefit offers an attractive incentive to buy an aircraft.

Sen. Pat Toomey (R-Pennsylvania) and Rep. Jodey Arrington (R-Texas) introduced the Accelerate Long-Term Investment Growth Now (Align) Act in their respective chambers on April 15 to eliminate that phaseout.

“The end of the COVID-19 pandemic is in sight, and Congress should enact policies that enable workers and job creators to propel our economic recovery,” said Toomey, in announcing his bill, S.1166, which is co-sponsored by 15 Republican senators. “Allowing businesses to immediately write off purchases of new equipment was one of the most pro-growth features of the 2017 tax reform law.” He added that the bill would provide “manufacturers and businesses of all sizes with more certainty regarding investment planning and growth.”

“There’s no bigger incentive in the tax code for job creation and economic expansion than allowing businesses, both large and small, to fully and immediately deduct the cost of new investments, equipment, and machinery,” agreed Arrington, who has attracted 16 co-sponsors (all Republican) to his bill, H.R.2558.

In offering its support, the NBAA expressed concern that allowing bonus depreciation to expire could be damaging to the U.S. economy as the country emerges from the prolonged pandemic.

“The Align Act is a critical piece of legislation that recognizes the importance of immediate expensing to the growth and recovery of business aviation,” said Scott O’Brien, NBAA senior director of government affairs. “Immediate expensing also simplifies the tax code and is a proven incentive for new and preowned aircraft transactions.”